BenjaminPimentel

But a year after Whitman took the CEO job, H-P
HPQ, +0.37%
is still viewed by many as a lumbering technology behemoth besieged on several fronts.

Reuters

Hewlett Packard CEO Meg Whitman in Sun Valley, Idaho, on July 12, 2012. Whitman will outline the company’s long-term strategy at an analyst meeting on Wednesday.

On Wednesday, Whitman will hold her first analyst meeting since taking the CEO job last September. The meeting comes amid rising concerns over H-P’s competitive position in both the consumer and corporate arenas of a fast-changing tech market.

The worries are evident in H-P’s stock, which is down more than 30% since the beginning of the year, and has shed more than 20% over the last 12 months.

The shares fell 0.8% to $17.07 in afternoon trade on Tuesday.

“We expect H-P management to warn of near-term pressures while explaining why there is long-term upside in the company’s multi-year turnaround,” wrote Steven Milunovich of UBS in a note on Monday, adding that the company “may need to look at corporate restructuring” given its rising debt levels.

Whitman herself acknowledged during the company’s last earnings call in August that H-P has “a number of challenges.”

“Some of them are macroeconomic,” she said, “others are industry trends, and frankly, some are about H-P’s execution. Make no mistake about it, we’re still in the early stages of the turnaround.”

But many analysts worry that H-P is running out of time. Whitman took over a company that had been striving for a decade to be dominant in both corporate and consumer arenas. Some analysts now see that as an unworkable strategy. This view was evident in the concern over H-P’s position in two markets it dominates — PCs and printers.

Personal computers have been particularly problematic for the company.

H-P is the top PC vendor in the world, but slowing growth in that sector has weighed on the company’s financial performance. Whitman’s predecessor — ex-CEO Leo Apotheker — stunned investors last year by announcing that H-P may get out of the PC business. Whitman began her term as CEO by backing away from that idea.

But sluggish sales and uncertainty in the PC market has prompted some analysts to call on H-P to get out. The company faces a similar problem in printers, once considered its crown jewel, as growing use of items such as tablets have cut into the highly profitable sales of consumables such as ink that were high-margin contributors to H-P’s bottom line.

“In our view, a courageous move would be for H-P to sell the PC and printing businesses to help pay down debt and reset the company’s revenue base, setting the stage for renewed growth over the long term,” J.P Morgan analyst Mark Moskowitz wrote in a note to clients.

A major problem for H-P is that much of the growth in consumer technology is in markets where it’s not a major player — smartphones and tablets.

Speculation that H-P might make a move into those markets has been greeted with some skepticism, especially after its aborted effort to use its acquisition of Palm Inc. for a serious offensive in mobile computing.

Topeka Capital’s Brian White argued in a note that “clearly, H-P missed the ramp of non-PC devices for the mobile Internet and we believe any efforts to catch up with smartphones, tablets or other mobile devices will prove disappointing for all involved.”

Last week, Jefferies analyst Peter Misek cut H-P to a sell rating, partly based on the fear that H-P “will aggressively attack the smartphone and tablet markets, which we believe are risky investments.” He put his price target on the stock to $14 from $17.

Not everyone agrees that H-P has to give up its PC and printer businesses.

“H-P has been so focused on solving yesterday’s IT problems that I think over the last few years it spent way too much time cutting costs to solve yesterday’s tech problems off a lower cost base,” he told MarketWatch.

“The ship is not too big to turn. But it needs a more clear compass heading,” he said.

On the corporate IT front, H-P is also struggling for a clear path forward. This was underscored in August when H-P announced an $8 billion goodwill charge related to its IT services business.

The move was widely believed to be based largely on the lackluster results from the EDS business that H-P previously acquired, and was considered a blow to the company’s bid to expand its footprint in the higher-margin segments of corporate IT.

Analysts also expect H-P to record a goodwill charge for its much-maligned purchase of Autonomy Corp. for $10 billion, which was also supposed to boost its position in the business software market.

The corporate IT market itself has been consolidating in a way that has hurt H-P. For one thing, the changes have turned one-time H-P partners, led by Cisco Systems Inc.
CSCO, +0.21%
and Oracle Corp.
ORCL, +0.51%
, into its major rivals in such markets as servers and networking.

Then there’s the uncertain global economy. Wobbly IT spending has taken a toll on H-P, particularly in Europe where the company has a huge exposure.

J.P. Morgan’s Moskowitz wrote that “business conditions remain challenging and with limited remedies.” He cited a survey of chief financial officers which showed that “planned growth in IT spending, in general, appears to be compressing.”

He added: “Overall, we expect H-P to acknowledge the business challenges, injecting cautious commentary related to fiscal 2013 and then trying to shift the focus more on H-P’s long-term turnaround.”

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